Licensed bank (deposit guarantee)

A licensed bank is a company that has been authorised by a banking regulator to take deposits and lend. Money held with it is normally covered by a deposit guarantee scheme, which repays customers up to a set limit if the bank fails. Many fintech accounts are provided by e-money or payment institutions instead, which protect customer money by keeping it separate rather than by a deposit guarantee. Rabobank and Revolut Pro are listed as having this feature.

The guarantee matters when you keep significant cash balances in the account. It matters less for an account used only to pay bills, where money moves through quickly. The limit applies per person and per bank, not per account, so large balances may exceed it whichever provider you choose.

• Ask which regulator licensed the provider and in which country, and look the entry up in the public register.
• Find out which deposit guarantee scheme applies to your account and what its limit is.
• Ask whether the account you would open is held by the licensed bank or by a separate entity that is not covered.
• Check how balances are protected, and what happens to your money if the provider fails.